Sunday, March 31, 2013

Weekly Update: Medium Term Outlook

  • CNX Nifty opened lower this week at 5707.3 (5816.75) made a lower high of 5718.4 (5863.6) , and made a lower low of 5604.85 (5631.8). It however closed higher at 5682.55 (5651.35) for the week.
  • The RSI(14) is at 47 Remember it had crossed over to 70 level in the last week of Dec 2012, first time since Dec 2010. Fast MACD has slipped below center line and continues below it's signal line. All in all the momentum indicators are indicating weakness but oversold. The ADX reading for the week is 20.43, coming off from all time low of 9.48 registered for the week ending 7th Sept 2012.
  • The Adjusted Volumes for this week were about average. The OBV is in downtrend. The CMF continues below centerline around -0.1.
  • The Pars Fortunae for this week lies in 27 degrees Leo. This point is void of aspects! The Sun, Venus, Mars, Uranus are conjunct with each other. The Moon is in Jyeshtha, 2nd Pada and is in opposition with Jupiter. Monday happens to be the first day of the financial year too.
  • This week Nifty has supports between 5570 to 5590. It would be rangebound between 5660 and 5860, while it would be overbought around 5930. Also it would be dull between 5760 to 5780.

Friday, March 29, 2013

April Update: Long Term Outlook

  • The Objective of Monthly Outlook is to look at long term prospects of Indian Stock market. It would also be helpful to investors, who buy and hold for long periods of time such as three years or more.
  • CNX Nifty opened at 5702.45(6040.95) made a lower high of 5971.2(6052.95) made a lower low of 5604.85 (5671.90) and closed marginally lower at 5682.55 (5693..05).
  • Volumes were about 2% lower than Average. Monthly CMF is 0, ready to crossover to negative terrritory.
  • The Monthly RSI reading is 55, coming off from a high of 61, which in turn was the highest since May 2011. The Monthly ADX reading is just 9. The ADX reading is the lowest since the inception of CNX Nifty Index. These readings imply a trend-less market.
  • The CNX Nifty Index would be trading sideways, as long as it is between 5479 and 6018. The short term mean is at 5742. As long as it is trading sideways, it will keep reversing towards short term mean. As long as it is closing above it's medium term average calculated using monthly data, that is 5187, it would have a positive bias.
  • In the Outlook for October 2012 it was observed, "The 5310 is an important level, if Nifty closes above this level, it could go to 5500 - 5680 - 5880 levels. Also it means that if Nifty closes above 5310 in September Closing, the Market Structure would change to buy every dip." Nifty achieved 5500, 5680, 5880 levels, since then. Now Nifty is quoting with a negative bias. The Bias would remain negative below 5775. The targets for downside are 5525, 5415, 5360, 5180 as long as Nifty trades below 5775.
  • The 5525 is a strong support, below which Nifty might turn extremely bearish.

Thursday, March 14, 2013

Nifty's Moves

After getting supported at 5791.75 CNX Nifty would now target 6082, as Swing High.

Wednesday, March 13, 2013

CNX Nifty: Seeking Support

Nifty after making a swing high of 5971, is likely to find support around 5837. In an unusual scenario, it might seek support around 5782.

Friday, March 8, 2013

FII: Battered Bruised and Humiliated

When I look back at the years goneby and all the learning that my mind was subjected to has left me convinced about one thing. And that is, the popular (POP) beliefs and knowledge are always a part of a propaganda by some interest group.

I have read it in books and forums and articles etc., that any given Capital Market at any point of time chiefly consists of two groups, namely, the Smart Money and Dumb Money. Smart Money is usually the Institutional Operator, who on behalf of the institution that he represents, enters into contracts for sale or purchase of an asset or commodity. While dumb money, includes the novice traders and investors who generally lack any insight about the Market Internals.

But over a period of time, having keenly followed the institutional operators, I have come to the the conclusion, that, there can't be anything farther from the truth to say that Institutional Operators have any special insight into the working of the market internals. They are as naive, as dumb, and as impatient, as a single contract trader. What keeps them afloat is the money management and the fact that they could have free supply of money available to them, due to the goodwill of the funds or institutions that they represent. While a single contract trader is always under capitalised, so to say.

The Institutional desks were seen taking short positions in last three four trading sessions averaging around 5760. Yesterday, they were seen running for cover! Actually they were running to cover their short positions.

I don't know if the people manning the Institutional desks are school dropouts or clerks, but they lack a very basic understanding of the Market Internals. I would not hesitate to say that the major source of noise in Indian Capital Markets are the Institutional Desks. Seriously, these guys have no idea of why are they doing- what they are doing or whether it could ever make some sense. After all to loose a few hundred crores in derivatives, is no smartness at all....

Nifty could go all the way to 5938 - 5955, or in some exceptional circumstances could go all the way upto 6017 - 6025, before continuing on it's final corrective journey.